Exhibit 99.1
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial
statements give effect to the merger of International Home Foods, Inc. with and
into a wholly owned subsidiary of ConAgra, Inc. on August 24, 2000 using the
purchase method of accounting, after giving effect to the pro forma adjustments
described in the accompanying notes. The unaudited pro forma combined condensed
financial statements should be read in conjunction with the audited and
unaudited historical consolidated financial statements and notes of ConAgra and
International Home Foods.
The unaudited pro forma combined condensed statements of earnings give
effect to the merger as if it had occurred at the beginning of the period
presented. ConAgra's fiscal year ended on May 28, 2000 and International Home
Foods' fiscal year ended on December 31, 1999. The unaudited pro forma combined
condensed statements of earnings for the year ended May 28, 2000 combine the
historical consolidated statement of earnings of ConAgra with the recasted
unaudited consolidated statement of income of International Home Foods for the
twelve-month period ended June 30, 2000. For purposes of presenting the
unaudited pro forma combined condensed statement of earnings, International Home
Foods' fiscal year has been recasted to June 30, 2000, by including the
unaudited reported financial statements for the quarter ended June 30, 2000 and
the three previous quarters ended March 31, 2000, December 31, 1999 and
September 30, 1999. The unaudited pro forma combined condensed balance sheet
gives effect to the merger as if it had occurred on May 28, 2000 and combines
ConAgra's consolidated balance sheet as of May 28, 2000 with International Home
Foods' consolidated balance sheet as of June 30, 2000.
The unaudited pro forma adjustments described in the accompanying notes
are based upon preliminary estimates and assumptions that the managements of
ConAgra and International Home Foods believe are reasonable. The pro forma
adjustments are based on the information and assumptions available at the time
of the merger. The purchase price allocation will be completed after the
finalization of asset and liability valuations. The unaudited pro forma combined
condensed financial statements are presented for illustrative purposes only and
do not purport to be indicative of the operating results or financial position
that would have actually occurred if the merger had been in effect on the dates
indicated, nor is it necessarily indicative of future operating results or
financial position of the merged companies. The unaudited pro forma combined
condensed financial statements do not give effect to any potential cost savings
or other operating efficiencies that ConAgra expects to result from the
transaction.
<PAGE>
CONAGRA, INC.
INTERNATIONAL HOME FOODS, INC.
Pro Forma Combined Condensed Statement of Earnings
For the Year-Ended May 28, 2000
(Unaudited)
(Amounts in Millions, Except Per Share Data)
<TABLE>
<S> <C> <C> <C> <C>
ConAgra International Home Foods
Fiscal Year Ended Fiscal Year Pro Forma
Ended -----------------------------
May 28, 2000(1) June 30, 2000(2) Adjustments(5) Combined(7)
------------ ------------- ----------- --------
Net Sales......................... $25,385.8 $2,209.7 ($375.6) $27,219.9
Costs and Expenses:
Cost of goods sold.............. 21,205.9 1,150.8 -- 22,356.7
Selling, general and administrative 2,888.2 762.6 (336.9) 3,313.9
expenses.....................
Interest expense................ 303.4 99.9 46.2 449.5
Restructuring/Impairment charges 322.2 -- 322.2
----- ----- ----- ---------
24,719.7 2,013.3 (290.7) 26,442.3
-------- ------- ------- --------
Income before income taxes........ 666.1 196.4 (84.9) 777.6
Income taxes...................... 253.1 96.1 (17.6) 331.6
----- ---- ------- ----------
Net Income ....................... $ 413.0 $ 100.3 ($67.3) $ 446.0
======= ======= ======= =======
Income per share - basic(6): $ .87 $ 1.36 $ .86
====== ======= ======
Income per share - diluted(6): $ .86 $ 1.32 $ .85
====== ======= ======
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
<PAGE>
CONAGRA, INC.
INTERNATIONAL HOME FOODS, INC.
Pro Forma Combined Condensed Balance Sheet
(Unaudited)
(Amounts in Millions, Except Share Data)
<TABLE>
<S> <C> <C> <C> <C>
ASSETS ConAgra International Home Foods Pro Forma
May 28, 2000(1) June 30, 2000(2) Adjustments(4) Combined
------------ ------------- ----------- --------
Current assets
Cash and cash equivalents....... $ 157.6 $ 15.4 $ -- $ 173.0
Receivables, net................ 1,606.8 173.8 -- 1,780.6
Inventories..................... 3,787.3 275.3 -- 4,062.6
Other current assets............ 414.8 52.2 -- 467.0
------------ ---- -- -------
Total current assets.......... 5,966.5 516.7 -- 6,483.2
----------- ----- -- -------
Property, plant and equipment, net 3,584.0 316.0 -- 3,900.0
Brands, trademarks and goodwill, net 2,366.0 431.0 1,547.7 4,344.7
Other assets...................... 379.3 263.7 18.0 661.9
------------ ----- ----- -------
$12,295.8 $1,527.4 $ 1,566.6 $15,389.8
========= ======== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable................... $1,255.5 $ -- $ -- $1,255.5
Revolving credit facility ...... -- 85.2 -- 85.2
Current installments of long-term
debt......................... 20.6 83.2 -- 103.8
Accounts payable................ 2,044.6 70.6 (18.9) 2,096.3
Advance on sales................ 888.7 -- -- 888.7
Other accrued liabilities....... 1,279.8 96.9 -- 1,376.7
----------- ----- ---- -------
Total current liabilities..... 5,489.2 335.9 (18.9) 5,806.2
----------- ----- ----- -------
Senior long-term debt, excluding
current installments............ 1,816.8 962.7 909.6 3,689.1
Other non-current liabilities..... 750.7 28.8 -- 779.5
Subordinated debt................. 750.0 -- -- 750.0
Preferred securities of subsidiary
company......................... 525.0 -- -- 525.0
Common stockholders' equity
Common stock ................... 2,620.7 .8 204.3 2,825.8
Additional paid-in capital...... 147.5 66.4 604.4 818.3
Retained earnings............... 1,420.7 193.4 (193.4) 1,420.7
Accumulated other
comprehensive loss ........... (103.1) (3.4) 3.4 (103.1)
Treasury stock, at cost......... (760.2) (57.2) 57.2 (760.2)
------------- ------ ------ -------
3,325.6 200.0 675.9 4,201.5
Less unearned restricted stock and
common shares held in
Employee Equity Fund............ (361.5) -- -- (361.5)
------------- ----- --- -------
Total common shareholders' equity 2,964.1 200.0 675.9 3,840.0
----------- ----- ----- -------
$12,295.8 $1,527.4 $ 1,566.6 $ 15,389.8
========= ======== ========= ==========
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
<PAGE>
CONAGRA, INC.
INTERNATIONAL HOME FOODS, INC.
Notes to Unaudited Pro Forma Combined Condensed Financial Statements
(Amounts in Millions, Except Per Share Data)
On August 24, 2000, ConAgra acquired all of the issued and outstanding
shares of common stock and stock options of International Home Foods in a
transaction accounted for as a purchase business combination. The assets
acquired and liabilities assumed will be assigned a portion of the purchase
price equal to their respective fair market values at August 24, 2000. The
unaudited pro forma combined condensed financial statements are based on the
following:
1. The historical consolidated financial statements of ConAgra.
2. The historical consolidated financial statements of International Home
Foods' recasted for the twelve-month period ended June 30, 2000.
3. a. The consideration paid for International Home Foods common stock was $22,
consisting of $11 in cash and a fraction of a share of ConAgra common
stock valued at $11 per share. The common stock portion of the merger
consideration is calculated as follows:
International Home Foods common stock outstanding
at August 24, 2000 74.985
Exchange ratio 0.54692
-------
ConAgra common stock to be issued in exchange
for International Home Foods common stock 41.011
Average price of ConAgra common stock $20.113
-------
Total common stock consideration $824.8
======
The exchange ratio of .54692 shares of ConAgra common stock for each
share of International Home Foods common stock outstanding was determined
by dividing $11 by ConAgra's average closing price of $20.113 as provided
for in the merger agreement. The exchange ratio was determined by the
average closing price of ConAgra's common stock on the ten trading days
ending on the fifth full trading day immediately preceding the merger.
b. ConAgra issued approximately 5.0 million ConAgra common stock options and
paid approximately $49.8 million in cash in exchange for all of the
International Home Foods outstanding stock options.
c. The cash portion of the purchase price, including transaction costs, was
provided by increased borrowings of ConAgra under its existing credit
facilities. In addition, ConAgra intends to replace International Home
Foods credit facilities and long-term debt with borrowings under
ConAgra's credit facilities and other long-term debt.
<PAGE>
4. The pro forma balance sheet adjustments to reflect the effect of the
acquisition accounted for as a purchase business combination are as follows:
Consideration:
Value of ConAgra common stock $ 824.8
Value of ConAgra common stock options 51.1
Cash issued for common stock and stock options 874.6
Transaction costs 35.0
--------
Total consideration 1,785.5
Net assets acquired 200.0
--------
1,585.5
Preliminary Allocation:
Deferred income taxes 37.8
--------
Excess of purchase price over net assets acquired $1,547.7
========
ConAgra expects to allocate a portion of the purchase price to buildings,
machinery and equipment and other identifiable assets. The purchase price
allocation will be completed after the finalization of asset and liability
valuations. In connection with the acquisition, ConAgra expects to
consolidate certain plants and will include the associated costs as part of
the purchase price allocation. ConAgra's management has not currently
completed its assessment of such activities.
5. The pro forma statement of earnings adjustments are as follows:
a. Provide depreciation and amortization of the fair values assigned to all
identifiable tangible and intangible assets. The excess of the purchase
price over the net assets acquired has preliminarily been allocated to
nondeductible goodwill and is being amortized using the straight-line
method over 40 years.
ConAgra expects to allocate a portion of the purchase price to
buildings, machinery and equipment and other intangible assets,
including brands. Assuming these assets had a weighted average life of
20 years, for each $100.0 million allocated to buildings, machinery and
equipment or other intangible assets, pro forma operating expenses would
increase by $3.5 million and pro forma net income would decrease by $1.6
million.
b. Reclassification of International Home Foods' trade promotion expenses
from selling, general and administrative expenses to net sales to
conform to ConAgra's presentation.
c. Adjust interest expense relating to (1) additional borrowings under
ConAgra's credit facilities of approximately $909.6 million for the cash
portion of the purchase price and approximately $746.1 million for the
repayment of International Home Foods credit facilities at an assumed
interest rate of 6.85% and (2) additional long-term borrowings of $385
million at 8.5% for the repayment of International Home Foods $385
million 10.375% Senior Secured Notes as follows:
Interest expense on credit facilities $113.3
Interest expense on long-term borrowings 32.7
IHF historical interest expense (99.8)
------
Net adjustment $46.2
=====
<PAGE>
A .125% change in the interest rate on the new indebtedness would change
annual interest expense by approximately $2.6 million.
d. Change in income tax expense/benefit as a result of pro forma
adjustments which affect taxable income. No pro forma income taxes have
currently been provided on the portion of the purchase price
preliminarily allocated to non-deductible goodwill.
6. The pro forma weighted average shares outstanding for the year ended May 28,
2000 are as follows:
Basic:
Historical shares outstanding 475.7
Shares issued 41.0
-----
516.7
=====
Diluted:
Historical shares and share equivalents 478.6
outstanding
Shares issued 41.0
Effect of options assumed 2.8
-----
522.4
=====
7. ConAgra's financial data for fiscal 2000 includes restructuring plan charges
of $621.4 million before tax ($385.3 million after tax). If these
restructuring plan charges were excluded, unaudited pro forma basic earnings
per share for fiscal 2000 would be $1.61 and unaudited pro forma diluted
earnings per share would be $1.59.
8. The pro forma ratio of earnings to fixed charges for the year ended May 28,
2000 is as follows:
Fixed Charges as Defined:
Interest expense $ 497.4
Capitalized interest 5.5
Interest in cost of goods sold 31.4
Preferred distributions of subsidiary 43.0
One third of non-cancelable lease rent 35.2
-------
Total fixed charges (A) $ 612.5
=======
Earnings as Defined:
Pretax income after elimination of undistributed
earnings of equity method investees $ 765.6
Add fixed charges 612.5
Less capitalized interest (5.5)
--------
Earnings and fixed charges (B) $1,372.6
========
Ratio of earnings to fixed charges (B/A) 2.2
